Please ensure Javascript is enabled for purposes of website accessibility

Why Applied Materials Stock Gained 15% in September

By Demitri Kalogeropoulos - Oct 4, 2017 at 6:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A bullish long-term operating forecast from management sent shares to a new high last month.

What happened 

Semiconductor giant Applied Materials (AMAT -5.18%) jumped 15% last month, according to data provided by S&P Global Market Intelligence.

AMAT Chart

AMAT data by YCharts.

The increase sent the stock to a new high, with shares up 60% since the start of 2017.

So what

September's rally kicked into high gear late in the month following the company's annual investor meeting. During that presentation, executives put a few numbers behind the bullish outlook they've described in general terms in their last few quarterly reports.

An engineer works on a circuit board.

Image source: Getty Images.

Specifically, CEO Gary Dickerson and his management team believe the company can reach $4.5 billion in yearly revenue by 2020 in its services division, which translates into 15% compound annual growth over the next three years. Increasing demand for high-performance semiconductors will lead to sharp profit gains, too, with earnings per share improving to $5.08 in 2020, up from $1.75 per share in the most recent fiscal year. 

"A.I. and big data are sparking a renaissance in chip design," Dickerson told investors. "These factors combined with the strength of our diverse portfolio give us confidence in our ability to deliver higher levels of profitable growth."

Now what

Applied Materials is targeting a 19% sales boost for its fiscal fourth quarter to mark a slight slowdown from last quarter's record growth result. Yet if it can advance toward those aggressive long-term growth targets, I'd expect the stock's rally to continue.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Applied Materials, Inc. Stock Quote
Applied Materials, Inc.
AMAT
$86.27 (-5.18%) $-4.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.